Facing higher insurance bills? What's the real reason behind this global surge

Dubai: If you’ve recently renewed your car or health insurance and felt a sharp sting in your wallet, you’re not alone — and it’s not just a UAE problem. From Dubai to London to Los Angeles, insurance premiums have surged. But why?Insurance is a global industry, and many of the forces driving up premiums are interconnected across borders. Whether it’s your motor policy, health coverage, or home insurance, understanding what’s behind these increases can help you better navigate future choices — and maybe even reduce your costs.So, what’s going on?Insurance is, at its core, a business of predicting risk. Insurers collect premiums today to cover claims tomorrow. When the cost of those claims — or the likelihood of them happening — increases, premiums go up to balance the books. And in recent years, those costs have been rising fast.Let’s break down the main culprits driving premium hikes globally and how they relate to what we’re seeing in the UAE.1. More Expensive ClaimsAcross the world, insurance claims have become more frequent, and more costly.Vehicle repair costs are soaring. Newer cars — including electric and luxury vehicles — have more complex tech like sensors and cameras, making even minor repairs costly.Healthcare inflation means it’s more expensive to treat patients, especially as hospitals upgrade technology and deal with global supply chain issues.Litigation costs are rising, especially in places where legal settlements have grown larger. More claims mean higher payouts.In the UAE, these trends are echoed clearly. Health insurance premiums are expected to rise between 5% to 20% in 2025, and motor insurance premiums have already jumped by up to 40% in 2024 — much of that due to higher repair and reinsurance costs.2. Climate Change and Natural DisastersYes, even here.Extreme weather is no longer something that only affects hurricane zones. In April 2024, the UAE saw record rainfall and flooding, damaging thousands of vehicles. Events like these have led insurers to reevaluate risk levels — and they’re raising premiums accordingly.Globally, the same story is playing out: from wildfires in California to floods in Europe, the frequency and severity of natural disasters have increased. Insurers call these “catastrophic losses,” and they can cripple company reserves. To recover and prepare for future events, premiums rise — across all types of insurance, not just property.3. Economic Pressures and InflationInflation doesn’t just hit your grocery bill. It affects everything — including the cost of doing business for insurers.The cost of parts, paint, and labor for vehicle repairs has increased significantly.Medical treatments and pharmaceuticals are more expensive.Operational overheads like salaries, technology systems, and regulatory compliance costs have gone up.In short: when it costs more to cover claims, insurers must raise premiums to stay afloat. And while some costs may stabilise over time, others (like technology and healthcare) are likely to remain high.4. Reinsurance CostsInsurers don’t shoulder all the risk themselves — they buy insurance too. This is called reinsurance.When reinsurers raise their prices — often due to global catastrophes or economic uncertainty — those increases cascade down to your local insurer, and ultimately, to you.UAE insurers have felt this acutely, especially after the 2024 floods. As global reinsurers reassess their models for a riskier planet, local premiums must reflect those new realities.5. Fraud and Risky BehaviourUnfortunately, not everyone plays fair.Insurance fraud — including staged accidents or inflated claims — drives up costs for everyone. These tend to spike during times of economic hardship.Meanwhile, globally, distracted driving (often due to smartphone use) has led to a noticeable increase in road accidents. More accidents = more claims = higher premiums.What you can doWhile you can’t control global inflation or the weather, there are a few things you can do:Compare providers annually. Don’t auto-renew without checking if there’s a better deal out there.Bundle your policies (e.g., car + home) if your insurer offers discounts.Improve your risk profile: install dash cams, drive safely, and keep your health in check.Ask your insurer what drives your premium. Some are now more transparent and willing to offer personalised advice.Key takeaway?The rise in insurance premiums is global, complex, and not going away anytime soon. While some factors are out of our hands — like climate risks and reinsurance rates — others, like risky behaviour and lack of price shopping, can be managed individually.